How could California ruling affect Uber Canada?

WATCH ABOVE: Experts are split on whether a non-binding decision could have ramifications in Canada. Mark Carcasole reports.

TORONTO – A California Labour Commission ruling this week that Uber drivers are employees rather than self-employed contractors could hurt Uber Canada’s argument that it’s a technology company, not a cab company, a union spokesperson says.

The ruling could also impact the company’s case in a legal tussle with the city of Toronto, which took Uber to court several months ago.

“It certainly does debunk the bogus argument that Uber is making that they are not a transportation company, they are simply a technology company,” said Harry Ghadban, a national representative for Unifor and former taxi driver.

READ MORE: California ruling could change Uber Canada’s model

“A lot of us have believed, including me, that they are a taxi company that maybe has a little more sophisticated software – but they’re a taxi company, a limousine company, a transportation company – and that they should be governed by the same rules that apply to everybody else in those industries.”

Story continues below advertisement

The California Labour Commission said Wednesday in a non-binding decision that San Francisco-based Uber Technologies Inc. was involved in “every aspect of the operation” of its ride-hailing service, opening the company up to the possibility of being forced to pay its drivers employee benefits such as vacation pay, disability or severance.

Insurance is a major issue of contention for Uber, Ghadban said, because if Uber doesn’t cover the cost, the burden would be on drivers to meet the requirements of the various municipal by-laws and require an endorsement to carry passengers from point A to point B.

He added that if an Uber X driver is involved in an accident, there could be “huge liability” to the individual driver if their private insurance carrier were to claim that the driver lied to them by not informing them that they were operating a vehicle for hire.

“They receive calls in some manner or other from passengers, they arrange for somebody to pick them up and deliver them from point A to B. So they should be governed by the same rules and regulations, they should have to meet the same safety standards and the same regulations that the rest of the industries use.”

READ MORE: Toronto subway shutdown puts Uber’s surge pricing model in spotlight

“That adds a huge cost to the operation of those vehicles. Our drivers have to go through significant training periods, ensure that they’re qualified as drivers, they have to meet public safety requirements and all of the drivers in Canada have to be registered with the federal government and have a GST registration number,” he said.

Story continues below advertisement

Ghadban said he also doesn’t accept the argument that Uber is a different type of business model.

“Most technology companies would develop an application or an app or some software and they would sell it to the current industries who operate those businesses and say ‘We feel that this would be an improvement in how you currently operate so you should use our software,'” he said.

“Most technology companies don’t develop something and say ‘We’re a whole different entity, so therefore we shouldn’t be governed by the same rules and regulations as everybody else.'”

READ MORE: Uber in court with City of Toronto over legality of ride-hailing operations

Toronto employment lawyer Mark Fletcher said Canadian Uber drivers could assert themselves as employees in the wake of the California ruling.

“The benefits to an individual would be that they’d get things like employment insurance, they would get employer health tax covered, they would potentially have benefits rights and severance rights on termination. … So there may be some incentive for some individuals to move forward,” he said.

But there’s no guarantee they’d succeed.

“Whether or not Canadian courts would actually enforce the California decision is in my view unlikely – the law here is very different than it is in California,” he said.

Story continues below advertisement

A spokeswoman for Uber said in an email to Global News that the California Labour Commission’s ruling is non-binding and applies to a single driver, which she said is contrary to a previous ruling by the same commission, which concluded in 2012 that the driver “performed services as an independent contractor, and not as a bona fide employee.”

She said the drivers choose to work for Uber because they have complete flexibility and control over their hours and can earn their living from multiple sources, including other ride-sharing companies.

She added that five other U.S. states had come to the same conclusion and that Uber has already appealed the California ruling.

“I certainly understand why they’re appealing,” Fletcher said. “This could have major cost consequences for them: They could have tax liability, severance liability if they were in Canada and their costs could go up significantly as a result of this  if something were to go forward.”